ISLAMABAD: The asset size of non-banking financial (NBF) sector decreased by 7.15 per cent during the year 2018-19.

According to the annual report of the Securities and Exchange Commission of Pakistan (SECP) for the year 2018-19, the asset size of NBF sector reduced to Rs1,140 billion in June 2019 as compared to the asset size of Rs1,228 billion in June 2018, reflecting an overall decrease of 7.15pc.

The total size of the industry by June, 2019 was at Rs577.64 billion and the total number of funds (including plans) was Rs297 billion, it added.

As of June 30, 2019, equity funds dominated the Assets Under Managements (AUMs) of the mutual fund industry with the largest share of 33.99pc, while money market funds held the second largest industry share including 29.07pcv, followed by income funds with industry share of 21.03pc.

In order to further foster the growth of the mutual fund industry and promote ease-of-doing-business (EODB), the SECP instituted several regulatory reforms in the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (NBFC Regulations, 2008), the report revealed.

The SECP provided operational flexibility to the Asset Management Companies (AMCs) on charging different types of expenses within the overall expense ratio ceiling.

In this context, regulatory cap on management fee was withdrawn and AMCs can now charge management fee within the expense ratio limit.

Accordingly, expense ratio cap for equity, balanced, asset allocation and capital protected (dynamic asset allocation-direct exposure) schemes has been enhanced form 4pc to 4.5pc of average daily net assets value, and for income, aggressive income, capital protected, index and commodity schemes (cash settled) has been enhanced from 2pc to 2.5pc.

Furthermore, in order to facilitate the efforts for enhancing outreach of mutual funds, AMCs have been allowed to charge selling and marketing expenses including alternative delivery channels expenses to all categories of funds without any time and sub-limit.

Moreover, in order to reduce the operational burden on AMCs, the commission has also removed requirements of various regulatory approvals for mutual funds.

At present, 16 AMCs have licenses to conduct business of investment advisory in addition to business of asset management services, while four NBFCs have exclusive licenses to offer investment advisory services.

Four NBFCs namely PNO Capital Limited, Ijarah Capital Partners Limited, Lakson Investments Limited and JS Investments Limited have been granted license to undertake Private Equity and Venture Capital Fund Management services.

Three NBFCs have launched four funds namely PNO Pakistan Fund-1, Lakson Private Equity Fund, Lakson Venture Capital Fund I and Pakistan Emerging Market Fund-1.

As of June 30, 2019 the total assist size of private equity funds stands at Rs6,568 million.

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